A Conversation on the Federal Legislation

This morning after listening to the news, I asked David to help me understand more about the federal healthcare bill that was just passed last night. We wanted to share our conversation. It's just a start to analyzing what this bill will actually do, but may be helpful. One thing we know for sure is we still have a long way to go and VT needs to lead the way. Let's keep organizing!

David Kreindler
Short version: the government-subsidized individual mandate is another way to channel money, including public money, into private profits.

Do you have a specific question?

Kate Elizabeth Kanelstein
well, that answers one, about the mandate.

David Kreindler
The situation is not simple. The House approved the Senate bill yesterday, along with some other stuff in what is called a "budget reconciliation" measure, which the Senate can adopt with a simple majority vote.

Kate Elizabeth Kanelstein
So does that means it has basically passed now?

David Kreindler
The components of the federal legislation (most of which start in 2014) are: individual mandate; insurance exchange; no public option; tax credits to low- and middle-income people to help subsidize insurance premiums; penalties for employers whose employees use subsidies; tax credits for small businesses to offer insurance; subsidies for businesses that offer insurance to early retirees; expansion of Medicaid eligibility (to 133% of FPL); increase Medicaid reimbursement rates to those of Medicare; would close the Medicare "doughnut hole" by 2020; define minimum benefits; eliminate several ways that insurers deny coverage, such as pre-existing conditions, though they could charge older customers up to 3x more; would allow children to be on parents' plan up to age 26; and some disturbing stuff around abortion and undocumented residents.

The Senate bill has been approved by the House and just needs a signature from Obama. the House "reconciliation measure" still needs to be approved by the Senate.

The most salient feature of all is that almost nothing is being done to control the rising cost of healthcare, which is the main reason that people are not getting the healthcare that they need.

At least 23 million people will remain uninsured, after the bills go into effect.

Kate Elizabeth Kanelstein
So, what does this subsidized mandate do?
And how does it affect us?

David Kreindler
First of all, most of it does not take effect until 2014.

Kate Elizabeth Kanelstein
ah

David Kreindler
In the Senate bill, there would be a penalty of $95/year or 0.5% of household income, whichever is greater, for people without insurance. The penalty would rise to $750 or 2% in 2016 and be adjusted for inflation thereafter. In the House bill, the numbers are slightly different, but the idea is the same. There are different exemptions in the Senate and House bills, but the general idea is that people with religious objections or very low incomes would be exempted — though the latter could probably get Medicaid.

Kate Elizabeth Kanelstein
That's very helpful thanks.

David Kreindler
So, basically, it would do close to nothing to help underinsured Vermonters, would do a little to help uninsured Vermonters, and would have little effect on the insurance industry in Vermont because we already regulate insurance companies pretty well in Vermont.

Kate Elizabeth Kanelstein
In VT we already have many of these measures (minus a mandate), yet we still see people going bankrupt and avoiding going to the doctor.

What about people getting to keep their parents' insurance until 26?

David Kreindler
There are definitely ways that people will be helped by the "reform" — assuming that they survive to 2014. See http://www.healthreform.gov/reports/statehealthreform/vermont.html for the administration's materials. The problem is that the reform does not really deal with why the healthcare system is broken — profit and cost shifting — so it is not sustainable reform. Basically it requires us to pay taxes to subsidize our own private health insurance instead of simply paying for healthcare.

Kate Elizabeth Kanelstein
right.. we're just redirecting our money, but it still goes primarily through insurance companies.
and there's no system to make sure that healthcare happens efficiently

David Kreindler
Exactly. The major goal of the "reform" effort is to give more money to health insurance companies and other medical products/services industries, not to ensure that people receive the healthcare that they need.

Kate Elizabeth Kanelstein
gotcha.. thanks for taking the time to break that down.

David Kreindler
What good stuff is in there is just a patchwork/piecemeal approach.

Comments

[The following statement was released today by leaders of Physicians for a National Health Program, www.pnhp.org. Their signatures appear below.]

As much as we would like to join the celebration of the House's passage of the health bill last night, in good conscience we cannot. We take no comfort in seeing aspirin dispensed for the treatment of cancer.

Instead of eliminating the root of the problem – the profit-driven, private health insurance industry – this costly new legislation will enrich and further entrench these firms. The bill would require millions of Americans to buy private insurers' defective products, and turn over to them vast amounts of public money.

The hype surrounding the new health bill is belied by the facts:

* About 23 million people will remain uninsured nine years out. That figure translates into an estimated 23,000 unnecessary deaths annually and an incalculable toll of suffering.

* Millions of middle-income people will be pressured to buy commercial health insurance policies costing up to 9.5 percent of their income but covering an average of only 70 percent of their medical expenses, potentially leaving them vulnerable to financial ruin if they become seriously ill. Many will find such policies too expensive to afford or, if they do buy them, too expensive to use because of the high co-pays and deductibles.

* Insurance firms will be handed at least $447 billion in taxpayer money to subsidize the purchase of their shoddy products. This money will enhance their financial and political power, and with it their ability to block future reform.

* The bill will drain about $40 billion from Medicare payments to safety-net hospitals, threatening the care of the tens of millions who will remain uninsured.

* People with employer-based coverage will be locked into their plan’s limited network of providers, face ever-rising costs and erosion of their health benefits. Many, even most, will eventually face steep taxes on their benefits as the cost of insurance grows.

* Health care costs will continue to skyrocket, as the experience with the Massachusetts plan (after which this bill is patterned) amply demonstrates.

* The much-vaunted insurance regulations – e.g. ending denials on the basis of pre-existing conditions – are riddled with loopholes, thanks to the central role that insurers played in crafting the legislation. Older people can be charged up to three times more than their younger counterparts, and large companies with a predominantly female workforce can be charged higher gender-based rates at least until 2017.

* Women’s reproductive rights will be further eroded, thanks to the burdensome segregation of insurance funds for abortion and for all other medical services.

It didn’t have to be like this. Whatever salutary measures are contained in this bill, e.g. additional funding for community health centers, could have been enacted on a stand-alone basis.

Similarly, the expansion of Medicaid – a woefully underfunded program that provides substandard care for the poor – could have been done separately, along with an increase in federal appropriations to upgrade its quality.

But instead the Congress and the Obama administration have saddled Americans with an expensive package of onerous individual mandates, new taxes on workers’ health plans, countless sweetheart deals with the insurers and Big Pharma, and a perpetuation of the fragmented, dysfunctional, and unsustainable system that is taking such a heavy toll on our health and economy today.

This bill's passage reflects political considerations, not sound health policy. As physicians, we cannot accept this inversion of priorities. We seek evidence-based remedies that will truly help our patients, not placebos.

A genuine remedy is in plain sight. Sooner rather than later, our nation will have to adopt a single-payer national health insurance program, an improved Medicare for all. Only a single-payer plan can assure truly universal, comprehensive and affordable care to all.

By replacing the private insurers with a streamlined system of public financing, our nation could save $400 billion annually in unnecessary, wasteful administrative costs. That’s enough to cover all the uninsured and to upgrade everyone else’s coverage without having to increase overall U.S. health spending by one penny.

Moreover, only a single-payer system offers effective tools for cost control like bulk purchasing, negotiated fees, global hospital budgeting and capital planning.

Polls show nearly two-thirds of the public supports such an approach, and a recent survey shows 59 percent of U.S. physicians support government action to establish national health insurance. All that is required to achieve it is the political will.

The major provisions of the present bill do not go into effect until 2014. Although we will be counseled to “wait and see” how this reform plays out, we cannot wait, nor can our patients. The stakes are too high.

We pledge to continue our work for the only equitable, financially responsible and humane remedy for our health care mess: single-payer national health insurance, an expanded and improved Medicare for All.